This guide on Gann fans teaches you about what Gann fans are, how they are used in charts, and what insights traders gather from Gann fans to make better-informed decisions.
What Are Gann Fans?
Gann Fans, created by W. D. Gann, are based on the premise that prices move in predictable patterns.
Gann’s theory is based on time/price movements with the 1-time unit by 1 price unit (i.e. 1 x 1) being the main angle (45-degrees).
However, there are other angles such as 1 x 2, 2 x 1, 1 x 4, 4 x 1, etc. Gann Fans are drawn from major price peaks and bottoms and are used to show trendlines of support and resistance.
Reading The Gann Fan: An Example With Futures Charts
In the previous diagram, the price of Corn futures was held up by a support line that rose at a rate of 8 price units by 1-time unit (1 x 8).
The chart of Wheat below shows both an upward Gann Fan and a downward Gann Fan, both the 1 x 8 angle:
In the chart of wheat futures above, wheat prices were held up by the 1 x 8 support line.
When wheat prices peaked and subsequently began to fall, wheat was held down by the 1 x 8 resistance line.
Can I Learn How To Use Gann Fans?
Gann Fanns are an art and involve intense study by potential users.
The fact that the creator W. D. Gann wrote most of his studies on Gann Fans and angles in cryptic language, which makes challenging for students of Gann Fans to understand.
That said, Gann fans are based on logic and can be learned and applied by anyone.
Where Can I Trade With Gann Fans?
If you are interested in trading using technical analysis, have a look at our reviews of these regulated brokers available in to learn which charting & analysis tools they offer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. <b>Between 53.00%-89.00% of retail investor accounts lose money when trading CFDs.</b> You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
If you’d like a primer on how to trade commodities in general, please see our introduction to commodity trading.
How do you trade with Gann fan?
When analyzing a chart, traders draw a Gann fan, a 45-degree angled line at a point of significant change in price direction. This point of change in a chart is called the ‘reversal point’. Online brokers like Plus500 provide charting tools to draw an accurate 45-degree Gann fan line on the chart.
How do you calculate a Gann angle?
Gann angles are calculated using time (T) and price (P) values. In Gann’s equation, n represents the number of degrees that determines the angle of the Gann line, so T x P = n. Gann’s equation goes as follows: 1 x 8 = 82.5 degrees, 1 x 4 = 75 degrees, 1 x 3 = 71.25 degrees, 1 x 2 = 63.75 degrees, 1 x 1 = 45 degrees, 2 x 1 = 26.25 degrees, 3 x 1 = 18.75 degrees, 4 x 1 = 15 degrees, 8 x 1 = 7.5 degrees.